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Will the recent Union Budget announcements for the farm sector help make India’s agriculture sector future ready and modern? That’s a question at the centre of many debates since February 1, when Finance Minister Nirmala Sitharaman presented the Budget. So, what really happened?
The Budget made some major announcements not only for agriculture but also for the allied sectors. On top of that, there was a significant rise in the budgetary allocation in the area. The combination of the two decisions triggered a narrative suggesting this was an agriculture-centric Budget, to some extent.
The allocation for the Ministry of Agriculture rose by just around 3.88 per cent from the Budget Estimates (BE) of FY25 and by 6.60 per cent from the Revised Estimates (RE) of the same financial year to ₹127,290.16 crore (around ₹1.27 trillion). But, when it came to the whole sector — comprising animal husbandry, dairy and fishing — as well as other allocations pertaining to farming, the increase was significant. The Budget documents revealed that overall, the agriculture and allied sectors got a budgetary allocation of ₹171,437 crore (₹1.7 trillion), almost 22 per cent more than the RE of FY25 and almost 13 per cent more than the BE of FY25.
That makes it one of the biggest increases in budgetary allocation for agriculture and allied sectors in the last many years. Irrigation is one of the allied sectors that saw a jump in allocation. A single component of ‘Har Khet Ko Pani’ under the Pradhan Mantri Krishi Sinchayee Yojana of the Jal Shakti Ministry has got an almost 83 per cent rise in allocation in BE of FY26 as compared to RE of FY25 and also BE of FY25.
Around ₹811 crore was spent on the component in FY24. The spending under this head in RE of FY24 was ₹600 crore; in BE of FY26, it has been raised to ₹1,100 crore.
‘Har Khet to Pani’ spending is towards the implementation of projects for repair, renovation and restoration of water bodies, surface minor irrigation schemes and groundwater irrigation programmes.
Other major announcements include increasing the credit limit on the Kisan Credit Cards (KCC) from ₹3 lakh to ₹5 lakh. That is expected to immediately benefit almost 8 million account holders and dedicated missions on cotton, vegetables, pulses and hybrid seeds. The allocation for interest subvention for such loans was not raised since the initial beneficiaries are expected to be just 10 per cent of the total KCC accounts.
The mandatory big-ticket spending on PM-KISAN and towards interest subvention for short term crop loans, PM-ASHAA and Rashtriya Krishi Vikas Yojana, were all either retained at their BE levels or got a marginal hike. Even so, experts believe that this Budget would help Indian agriculture leapfrog.
For instance, the missions on pulses, cotton, vegetables and hybrid seeds, along with spending on irrigation, are all aimed at raising production and also addressing the key challenge of falling yields, an official pointed out. While the investment in research and technology fell short of expectations, like in the past, the emphasis on allied sectors is a welcome development, he said.
“Each Union Budget has a few focused announcements towards modernisation of agriculture, and the 2026 Budget did not disappoint either. What was, however, different this time was that the steps outlined are likely to have a much wider beneficial impact on vulnerable farmers,” Ajay S Shriram, chairman and senior managing director, DCM Shriram, told Business Standard.
Shriram highlights three such steps: Global best practices with technical and financial assistance in 100 developing agri-districts will be introduced; there is a plan for targeted development and propagation of seeds that are climate resilient; and the best of science and technology support will be provided to cotton farming. ‘’Farmers in all three categories are exposed to high risk, and the measures announced should support the cause of millions of farmers,” Shriram said.
Analysts pointed to other Budget initiatives such as the mission on vegetables and fruits, which aims to promote production, efficient supply chains and processing to help farmers get remunerative prices. Similarly, the national mission on hybrid seeds seeks to strengthen the research ecosystem and propagation of hybrids with high yield and pest resistance.
The allocation for the missions ranged between ₹100 crore and ₹ 1,000 crore with the highest reserved for the mission on pulses (₹1,000 crore).
On research, however, the expectation was much higher. The Budget promised to set up a National Mission on Hybrid Seeds, but with a small allocation of just ₹100 crore. Also, the budget for the Department of Agricultural Research and Development was kept at ₹10,466.49 crore, which was a meagre increase of just 3 per cent. Another point that experts noted was that mechanisation in farming didn’t get any focus.
As for subsidies on food and fertiliser, they remained at their existing levels with a focus on adding more to the procurement basket.
Saket Chirania, co-founder of Agrizy, a B2B platform in the agro processing industry, said that while the focus on traditional productivity measures and infrastructure is welcome, a renewed emphasis on technology integration would have been a valuable addition. “Leveraging technology to support farmers and agri-food processing MSMEs in accessing working capital, managing operations, and securing better market access would unlock new avenues of growth for the agriculture and food processing industry, driving efficiency and sustainability,” Chirania said.
Besides the tech issue, the Budget may not have addressed some other concerns relevant for the agriculture sector. The latest Economic Survey, for example, quoted studies to say that a potential 2°C rise in annual temperature and a 7 per cent increase in the annual rainfall by 2099 could lead to an 8-12 per cent decline in Indian agricultural productivity. The Budget did not touch upon this.
